New Study Reports 2025 XR Funding Reached $3.5 Billion

LOS ANGELES, April 30, 2026: ARtillery Intelligence has released a new report that says global funding for private XR companies reached $3.5 billion in 2025. This is a 117 percent year-over-year increase, which reverses a three-year decline in annual XR funding. Entitled Follow the Money: XR Funding Roundup, Volume 2, the annual study tracks spatial computing sector funding, subsegment breakdowns, trend analysis, and strategic insights.

As for top takeaways, 2025’s XR funding is a subset of broader tech investment dynamics, and inherits many of its challenges. For example, in the down-cycle that has followed the Covid software boom, funding appetites have constricted in tech sectors outside of AI, causing scarcity in venture dollars. That has, in turn, resulted in a buyer’s market for startup equity, which impacts valuations, negotiating leverage, and funding viability for those looking to raise capital.

“The hangover from the Covid software boom has constrained broader funding levels,” said ARtillery Intelligence Chief Analyst Mike Boland, “while XR is plagued by its own hangover: the metaverse fallout. This creates a challenging environment for XR startups and anyone else who isn’t focused primarily on AI – a subset attracting most of the investment dollars today.”

The Intersection of XR and AI

Despite those challenges, AI has propelled XR to a degree. Initially a headwind as it attracted investment away from all other sectors, AI has become a tailwind for XR by elevating its capabilities. One particularly impactful example is the rise of AI-powered and lightweight smart glasses. One strategic takeaway is that XR startups that can demonstrate that they operate at this intersection of XR and AI can attract investors. But the key term is “demonstrate.”

“XR/AI integrations must be real and robust if they’re to have an impact on attracting venture funding,” said Boland. “Simply repeating the term ‘AI’ in pitch decks won’t work, just as dropping buzzwords didn’t work during the metaverse boom years. Investors see right through this.”

Shaky Ground

But though XR venture funding is on an AI-powered upswing, it’s still on somewhat shaky ground. This can be seen in the fact that 78 percent of 2025’s XR funding total was consolidated into two large deals – Aduril’s $2.5 billion round and Xpanceo’s $250 million round – followed by a long tail of smaller deals. This puts 2026 funding levels into question.

“Having such large eggs in so few baskets in 2025 lessens our confidence in sustained funding levels in 2026,” said Boland. “Healthier and more sustainable funding inflows in any given sector are generally seen with more consistent deal sizes and fewer outlying anomalies.”

Regardless of these short-term challenges, ARtillery Intelligence believes that XR funding will remain strong in the longer term. This outlook is due to several confidence signals and big-tech investment levels, especially in AI-fueled smart glasses – both display and non-display formats.

“Massive spending from Meta, Apple, and Google in smart glasses and XR platforms will engender robust ecosystems in the longer term, said Boland, “which will fuel down-market investment in startups that do everything from create content to build picks and shovels.”

Report Availability

Follow the Money: XR Funding Roundup, Volume 2 is available to ARtillery PRO subscribers, and more can be previewed here, including methodology, definitions, and inclusions. This report sits alongside ARtillery Intelligence’s quarterly revenue forecasts and monthly narrative reports.

About ARtillery Intelligence

ARtillery Intelligence chronicles the evolution of spatial computing, otherwise known as AR and VR. Through writings and multimedia, it provides deep and analytical views into the industry’s biggest players, opportunities, and strategies. Products include the AR Insider publication and the ARtillery PRO research subscription. Research includes monthly narrative reports, market-sizing forecasts, consumer survey data, and multimedia, all housed in a robust intelligence vault. Learn more here.